Health Insurance
Delivery systems
Traditional indemnity plans reimburse after a deductible and coinsurance. Managed care changes incentives: HMO (closed network, primary care gatekeeper, capitation, often no deductible), PPO (network discounts, no gatekeeper, out-of-network allowed at higher cost), POS (HMO/PPO hybrid), and EPO (network only). Know the cost-sharing terms: deductible, coinsurance (the percentage the insured pays after the deductible), copay, and out-of-pocket maximum.
Disability and related coverage
Disability income replaces a portion of earned income, typically 50–70%. Distinguish own occupation (pays if you cannot perform your own job - more favorable and more expensive) from any occupation; elimination period from benefit period; residual or partial disability; and presumptive disability. AD&D pays the principal sum for accidental death and a capital sum for a scheduled loss. Long-term care pays for ADL deficits or cognitive impairment after an elimination period; look for inflation protection and renewability. Also know group health (COBRA continuation, HIPAA portability, ACA rules), Medicare Parts A–D with Medigap, Medicaid, HSA/HDHP pairings, dental, vision, and critical illness.
Renewability and claims
Noncancelable (insurer cannot cancel or raise premium), guaranteed renewable (premium may rise by class), conditionally renewable, optionally renewable. Coordination of benefits prevents double payment: the primary plan pays first, the secondary up to the remaining balance. Utilization review, preauthorization, and appeal rights apply to claims.
Trap: coinsurance is usually stated as the insured's share - 20% coinsurance means the insurer pays 80%. A longer elimination period lowers premium; a longer benefit period raises it.
Worked example: $10,000 claim, $1,000 deductible, 80/20 coinsurance → insured pays $1,000 + 20% of $9,000 = $2,800.